The securities and investment lawyers of Gana LLP are investigating customer complaints filed with the Financial Industry Regulatory Authority (FINRA) against broker Malcolm Segal (Segal). According to FINRA’s BrokerCheck record, there are at least 11 disclosures on Segal’s record including customer complaints, multiple regulatory actions, and one employment separation from Aegis Capital Corp. The customer complaints against Segal allege misappropriation of customers’ funds, negligence, breach of fiduciary duty, and breach of contract.
Throughout his career with Aegis, Segal received number customer complaints:
January 2016: Alleging misappropriation of funds and misrepresentation. The damage amount requested is $135,000.00. This complaint is currently pending.
May 2015: Alleging the misappropriation of funds, breach of fiduciary duty, breach of contract, and negligence for the period of April 2008 to January 2015. The alleged damages were stated at $100,000.00. The dispute settled in September 2016 for the amount of $52,000.00.
July 2014: Alleging unauthorized wire transfers without the client’s written authorization or approval on two occasions. The claim was settled on April 2015 for the amount of $89,921.44.
November 2014: Alleging misappropriating funds during the period of May 2012 to July 2014. The alleged damages of $250,000.00 settled for $159,000.00 on November 2016.
August 2014: Alleging misappropriating funds for the period of November 2011 to August 2014. The alleged damages were $895,000.00 and settled for $120,000.00.
October 2014: Alleging misappropriated funds for the period of September 2011 to September 2014. The alleged damages of $1,225,000.00 settled for $570,000.00.
August 2014: Two customer complaints regarding alleged funds wired without the customer’s knowledge or authorization. The total alleged damages were $890,000.00. The cases settled for a total amount of $885,000.00.
In July 2014, Segal was discharged from Aegis Capital Corp. for failing to cooperate with an internal investigation concerning customer complaints. Segal was also barred from FINRA in November 2014 for failing to provide documents and information regarding an investigation into allegation of Segal wire transferring an Aegis customer’s funds to an outside business under his control.
Segal was associated with Aegis Capital Corp. from April 2011 to July 2014. Before working at Aegis, Segal was employed at Cumberland Brokerage Corporation from January 1989 to April 2011.
A brokerage firm owes a duty to all of its customers to properly monitor and supervise its employees. The duty to supervise is a critical component of the securities regulatory scheme. Regulatory authorities such as the SEC and FINRA have steadily heightened the supervisory obligations of brokerage firms in recent years. Supervisors have an obligation to respond vigorously to indications of irregularity, often times referred to as “red flags.” A supervisor cannot disregard red flags and must act decisively and specifically prevent improper conduct by their brokers. The importance of proper supervision is manifested in various types of securities activities. Brokerage firms are responsible for monitoring a broker’s investment recommendations to clients, outside business activities, and representations to investors among other obligations. In addition, brokerage firms are responsible for conducting due diligence on the securities products they sell and devising a written supervisory system to achieve compliance with the securities laws.
Fiduciary duties arise in many different contexts within the securities industry. A fiduciary duty is said to exist in all circumstances where trust and confidence is placed in another. A fiduciary duty can also arise from a written agreement that empowers an advisor to act as the investor’s agent. The existence and scope of the duty varies depending upon the nature of the relationship between the investor and the party being accused of the breach of fiduciary duty.
Gana LLP’s securities fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of fraud and negligence. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.